The Bitbuy Brief: Crypto Market Cap Flippening

The Bitbuy Brief

Issue #113

September 10th, 2020

Weekly Market Movement

Analysis: Crypto had a bounce back after an overall sudden drop the previous week. Bitcoin briefly dropped below $10,000 USD ($13,168 CAD) but has since recovered to hold $10,300 for the past 48 hours. Much to the chagrin of the ‘non-correlated’ crowd, the sudden crypto sell off and recovery seemed to mimic a similar sell off and recovery in the stock market.

Big Story Of The Week

The Last Two Months Has Seen As Much Of An Upheaval Of The Top 10 Cryptocurrencies By Market Cap As Any Period In Years – We Provide A Recap And Take A Closer Look At USDt (Tether).

• The largest cryptocurrencies by market cap has changed a lot in the past few months. While BTC and ETH remain firmly first and second, XRP has fallen below the fast rising USDt which has seen its cap increase 3.6x in 2020. Bitcoin chains BSV, BCH and LTC have been pushed out of the Top 5 in the last few months. Replacing them for the most part have been Chainlink (LINK) and newly floating native Polkadot token DOT. Long-time Top 5 coin EOS has seen particular underperformance dropping out of even the Top 10. Others which have fallen are many of the alt-coins that came to prominence in the 2017 run-up such as Stellar (XLM), TRON (TRX) and Monero (XMR).

Takeaway: Unsurprisingly, the driving factor of market cap growth in the last few months has been DeFi. ETH and USDt collectively have added just under USD 20B in market cap since the beginning of July. The growth in ETH and underperformance of other chains comes at a time when app-developers are actually looking for back-up chains as Ethereum approaches a precarious transition from proof-of-work to proof-of-stake consensus algorithms. Furthermore, seeing the fall of tokens like XLM and EOS in favour of newer “hot” protocols like Chainlink and Polkadot is a reminder of how sentiment-driven the crypto space continues to be.

September continues an amazing year for USDt, which had a market cap of just over USD 4B at the beginning of 2020. The token is benefitting from a perfect storm of factors. Trading venues in the space continue to innovate and favour USDt in most pairs denominated in stablecoin. In addition, the wave of activity in DeFi has shown a new use case for Tether both on DEXs and as a rail when navigating different yielding platforms. After a difficult 2019 which saw a variety of legal issues for the company and a brief decline in market cap, the company has re-established itself as the dominant stablecoin provider and continues to innovate in the space.

Other Weekly Headlines

• The USDt stablecoin has launched on the Solana blockchain network. Solana is described as ‘an ultra high-speed Layer 1 blockchain,’ promising ‘50,000 transactions per second.’ USDt is now available on 8 blockchain networks.  – link – @Tether

• Mastercard has revealed the ‘Central Bank Digital Currencies Testing Platform,’ aimed at allowing ‘central banks to assess and explore national digital currencies.’ Mastercard’s platform will allow central banks to ‘issue’ digital currencies in a controlled environment allowing for broader testing. – link – @Mastercard

• Stablecoin issuer Circle announced it will enable businesses that have integrated with its API to make payments in local fiat currencies, according to a Thursday post. ‘Fundamentally, whether you are a business accepting or making payments, there is a gradual move to actual digital money on the internet,’ according to Circle CEO Jeremy Allaire. – link – @Circle

Other Articles

South China Morning Post: Cryptocurrency: The Next Battleground In The US-China Rivalry

Reuters: Bank Of England Says Regulators Must Keep Ahead Of Stablecoins

Bloomberg: MetaMask’s Blockchain Mobile App Opens Doors For Next-Level Web

Forbes: Ethereum Is Eating Bitcoin

Disclaimer: The opinions and analysis expressed in this newsletter are those of the writer, and not of Bitbuy. Nothing in this note should be considered investment advice.